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UPDATE 1-G20 to recognize need for 'further dialogue and actions' on trade

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BUENOS AIRES, March 20 (Reuters) - The world's financial leaders are likely to reaffirm on Tuesday their commitment to fighting protectionism and recognize the need for "further dialogue and actions" on trade, just days before U.S. steel and aluminum tariffs are to enter into force.

Finance ministers and central bankers of the world's 20 biggest economies, the G20, have been meeting in Buenos Aires, discussing the risk to global economic growth posed by a potential trade war caused by the U.S. tariffs and looming trade sanctions on China.

A draft communique seen by Reuters showed the financial leaders added a phrase that was not in their initial draft, which stresses the need for further talks on trade issues.

"International trade and investment are important engines of growth, productivity, innovation, job creation and development," the G20 said in the latest draft communique seen by Reuters.

"We reaffirm the conclusions of our leaders on trade at the Hamburg Summit and recognize the need for further dialogue and actions. We are working to strengthen contribution of trade to our economies," the draft said.

The new language on the need for trade dialogue comes as U.S. President Donald Trump is readying plans to punish China with tariffs over its intellectual property practices.

Two officials briefed on the matter said Trump is expected to unveil tariffs on up to $60 billion in Chinese technology and telecoms products by Friday, the same day when a tariff of 25 percent on imported steel and 10 percent on aluminum are to apply.

A final communique is expected to be released later on Tuesday.

The Hamburg Summit communique, which was signed by Trump in July 2017, says that G20 countries would "continue to fight protectionism including all unfair trade practices."

But it also says in the same sentence that they "recognise the role of legitimate trade defence instruments" - an ambiguity which provides the U.S. with a way to argue its cause on the tariffs.

In the latest draft communique, the G20 ministers repeated their traditional pledges to refrain from competitive devaluations and avoid targeting their foreign exchange rates for export advantage.

But they also added some new language on exchange rates, emphasizing stability and flexibility:

"Strong fundamentals, sound policies, and a resilient international monetary system are essential to the stability of exchange rates, contributing to strong and sustainable growth and investment. Flexible exchange rates, where feasible, can serve as a shock absorber," the draft communique said. (Reporting by Anthony Boadle and David Lawder, Writing by Jan Strupczewski Editing by Paul Simao and Rosalba O'Brien)